Candelaria Garcia v. State Farm Lloyds and Sylvia Garza ( 2016 )


Menu:
  •                                                                                     ACCEPTED
    04-16-00209-CV
    FOURTH COURT OF APPEALS
    SAN ANTONIO, TEXAS
    8/12/2016 2:17:55 PM
    KEITH HOTTLE
    CLERK
    CASE NO. 04-16-00209-CV
    FILED IN
    4th COURT OF APPEALS
    SAN ANTONIO, TEXAS
    IN THE                  08/12/2016 2:17:55 PM
    KEITH E. HOTTLE
    Clerk
    COURT OF APPEALS
    FOR THE FOURTH DISTRICT
    SAN ANTONIO, TEXAS
    CANDELARIA GARCIA—Appellant
    v.
    STATE FARM LLOYDS and SYLVIA GARZA—Appellees
    APPELLEES' BRIEF
    Dan K. Worthington SBN 00785282      Linda J. Burgess      SBN 03381300
    dkw@atlashall.com                    lburgess@winstead.com
    Sofia A. Ramon       SBN 00784811    Elliot Clark          SBN 24012428
    sramon@atlashall.com                 eclark@winstead.com
    Elizabeth Cantu      SBN 24013455    WINSTEAD PC
    ecantu@atlashall.com                 401 Congress Ave., Suite 2100
    ATLAS, HALL & RODRIGUEZ, LLP         Austin, Texas 78701
    P. O. Drawer 3725                    (512) 370-2800 telephone
    818 Pecan (78501)                    (512) 370-2850 telecopier
    McAllen, Texas 78502
    (956) 682-5501 telephone
    (956) 686-6109 telecopier
    ATTORNEYS FOR APPELLEES
    ORAL ARGUMENT REQUESTED
    CASE NO. 04-16-00209-CV
    IN THE
    COURT OF APPEALS
    FOR THE FOURTH DISTRICT
    SAN ANTONIO, TEXAS
    CANDELARIA GARCIA—Appellant
    v.
    STATE FARM LLOYDS and SYLVIA GARZA—Appellees
    APPELLEES' BRIEF
    TO THE HONORABLE COURT OF APPEALS:
    Appellees, State Farm Lloyds ("State Farm") and Sylvia Garza, ask the
    Court to affirm the trial court's judgment that Appellant Candelaria Garcia
    ("Garcia") take nothing.
    -i-
    TABLE OF CONTENTS
    TABLE OF CONTENTS .......................................................................................... ii
    TABLE OF AUTHORITIES ................................................................................... iii
    INTRODUCTION ................................................................................................... xi
    STATEMENT OF THE CASE ............................................................................... xii
    RESPONSE ISSUES PRESENTED ..................................................................... xiii
    STATEMENT OF FACTS ........................................................................................1
    SUMMARY OF THE ARGUMENT ........................................................................4
    ARGUMENT .............................................................................................................7
    I.       The summary judgment grounds are broad enough to contemplate
    Garcia's later-pled defense to set aside the appraisal award, and State
    Farm was not required to pre-emptively negate Garcia's defense. .......7
    II.      No material fact issues existed. ...........................................................11
    III.     Garcia cannot avoid summary judgment by choosing not to cash her
    appraisal award check. ........................................................................16
    IV.      Under Texas law, the fact that an appraisal award is greater than an
    earlier estimate is no evidence of a breach of contract. ......................21
    V.       Payment of the appraisal award disposes of Garcia's prompt payment
    claims as a matter of law. ....................................................................22
    A.       The overwhelming majority of courts have found that TPPCA
    claims do not survive payment of an appraisal award ..............23
    B.       Graber relies on distinguishable authority that did not involve
    appraisal ....................................................................................25
    C.       The facts here are distinguishable from Graber .......................27
    D.       Garcia has not raised a fact issue ..............................................28
    VI.      Without a valid breach of contract claim, all of Garcia's extra-
    contractual claims fail. ........................................................................28
    CONCLUSION AND PRAYER .............................................................................34
    CERTIFICATE OF COMPLIANCE .......................................................................36
    - ii -
    TABLE OF AUTHORITIES
    CASES                                                                                                        PAGE(S)
    AKB Hendrick, LLP v. Musgrave Enters.,
    
    380 S.W.3d 221
    (Tex. App.—Dallas 2012, no pet.) ............................................ 9
    Amine v. Liberty Lloyds of Tex. Ins.,
    No. 01-06-00396-CV, 2007 Tex. App. LEXIS 6280 (Tex. App.—
    Houston [1st Dist.] 2007, no pet.).......................................................................25
    Anderson v. American Risk Ins. Co.,
    No. 01-15-00257-CV, 2016 Tex. App. LEXIS 6538 (Tex. App.—
    Houston [1st Dist.] June 21, 2016, no pet. h.) .............................................passim
    Barry v. Allstate Tex. Lloyds,
    No. 4:14-cv-00870, 
    2015 U.S. Dist. LEXIS 40953
    (S.D. Tex. Mar. 31,
    2015) .........................................................................................................5, 24, 32
    Bernstein v. Safeco Ins. Co. of Ill.,
    No. 05-13-01533-CV, 2015 Tex. App. LEXIS 6699 (Tex. App.—Dallas,
    June 30, 2015, no pet.) ........................................................................................25
    Bluebonnet Petroleum, Inc. v. Kolkhorst Petroleum Co.,
    No. 14-07-00380-CV, 2008 Tex. App. LEXIS 7724 (Tex. App.—
    Houston [14th Dist.] Oct. 9, 2008, pet. denied)..................................................15
    Blum's Furniture Co. v. Certain Underwriters at Lloyds London,
    No. H-09-3479, 
    2011 U.S. Dist. LEXIS 20604
    (S.D. Tex. March 2, 2011)
    affirmed by 459 Fed. Appx. 366 (5th Cir. 2012) ................................................23
    Blum's Furniture Co. v. Certain Underwriters at Lloyds London,
    459 Fed. Appx. 366 (5th Cir. 2012).............................................................passim
    Breshears v. State Farm Lloyds,
    
    155 S.W.3d 340
    (Tex. App.—Corpus Christi 2004, pet. denied) ...............passim
    Burks v. Metro Lloyds Ins. Co. of Tex.,
    No. H-14-591, 
    2015 U.S. Dist. LEXIS 88729
      (S.D. Tex. July 8, 2015) ......................................................................5, 24, 29, 32
    Cameron Int'l Corp. v. Liberty Ins. Underwriters, Inc. (In re Deepwater
    Horizon), 
    807 F.3d 689
    (5th Cir. 2015) ........................................................30, 31
    - iii -
    Cantu v. S. Ins. Co.,
    No. 03-14-00533-CV, 2015 Tex. App. LEXIS 8847 (Tex. App.—Austin
    Aug. 25, 2015, no pet.) .......................................................................................11
    Caso v. Allstate Tex. Lloyds,
    No. 7:12-CV-478, 
    2014 U.S. Dist. LEXIS 15279
    (S.D. Tex. Feb. 7,
    2014) ............................................................................................................passim
    Cater v. United Servs. Auto. Ass'n,
    
    27 S.W.3d 81
    (Tex. App.—San Antonio 2000, pet. denied) ..............................26
    Cavazos v. State Farm Lloyds,
    No. 7:13-CV-00252 (S.D. Tex. Oct. 27, 2015) ......................................24, 31, 32
    Cavazos v. State Farm Lloyds,
    No. 7:14-CV-395, 
    2015 U.S. Dist. LEXIS 163287
    (S.D. Tex. Dec. 4,
    2015) ...................................................................................................................31
    Church on the Rock North v. Church Mut. Ins. Co.,
    No. 3:10-CV-0975-L, 
    2013 U.S. Dist. LEXIS 17849
    (N.D. Tex. Feb. 11,
    2013) .............................................................................................................18, 19
    Cissne v. Robertson,
    
    82 S.W.2d 912
    , 918 (Tex. App.—Dallas 1989, writ denied) ............................... 8
    Continental Ins. Co. v. Guerson,
    
    93 S.W.2d 591
    (Tex. Civ. App.—San Antonio 1936, writ dism'd) ...................12
    Cook Composites v. Westlake Styrene Corp.,
    
    15 S.W.3d 124
    (Tex. App.—Houston [14th Dist.] 2000, pet. dism'd) ............... 10
    Corpus v. State Farm Lloyds,
    No. 7:14-CV-00383 (S.D. Tx. Oct. 27, 2015) ....................................................24
    Devonshire Real Estate & Asset Management, L.P. v. American Insurance
    Co., No. 3:12-CV-2199-B,
    
    2014 U.S. Dist. LEXIS 135939
    (N.D. Tex. Sep. 26, 2014) ...................18, 19, 20
    Dizdar v. State Farm Lloyds,
    No. 7:14-CV-402, 
    2016 U.S. Dist. LEXIS 13355
    (S.D. Tex. Feb. 4,
    2016) ...................................................................................................................32
    - iv -
    Dizdar v. State Farm Lloyds,
    No. 7:14-CV-514, 
    2016 U.S. Dist. LEXIS 49839
    (S.D. Tex. Apr. 13,
    2016) ...................................................................................................................32
    Dizdar v. State Farm Lloyds,
    No. 7:14-CV-664, 
    2016 U.S. Dist. LEXIS 20871
    (S.D. Tex. Feb. 22,
    2016) ...................................................................................................................32
    Douglas v. State Farm Lloyds,
    
    37 F. Supp. 2d 532
    (S.D. Tex. 1999) ....................................................................32
    Farah v. Magrige & Kormanik,
    
    927 S.W.2d 663
    (Tex. App.—Houston [1st Dist.] 1996, no writ) ...................8, 9
    Fitzhugh 25 Partners, L.P. v. KILN Syndicate,
    501, 
    261 S.W.3d 861
    (Tex. App.—Dallas 2008, pet. denied)............................20
    Franco v. Slavonic Mut. Fire Ins.,
    
    154 S.W.3d 777
    (Tex. App.—Houston [14th Dist.] 2004, no pet.) ... xi, 5, 11, 19
    Gabriel v. Allstate Texas Lloyds,
    No. 7:13-CV-181, 
    2013 U.S. Dist. LEXIS 186032
    (S.D. Tex. Nov. 1,
    2013) ............................................................................................................passim
    Gardner v. State Farm Lloyds,
    
    76 S.W.3d 140
    (Tex. App.—Houston [1st Dist.] 2002, no pet.) .......................... 5
    Graber v. State Farm Lloyds,
    No. 3:13-CV-2671-B, 
    2015 U.S. Dist. LEXIS 77361
    (N.D. Tex. June 15,
    2015) reconsideration denied (August 6, 2015)...............................23, 24, 25, 27
    Gronik v. Chubb Indem. Ins. Co.,
    10-CV-954, 11-CV-697, 
    2015 U.S. Dist. LEXIS 157266
      (E.D. Wis. Nov. 20, 2015) ..................................................................................13
    Guerra v. State Farm Lloyds,
    No. 7:14-CV-00381 (S.D. Tex. Oct. 27, 2015) ..................................................24
    Gulf Ins. Co. of Dallas v. Pappas,
    
    73 S.W.2d 145
    (Tex. Civ. App.—San Antonio 1934, writ ref'd) .......................12
    -v-
    Hernandez v. Allstate Texas Lloyds,
    No. 7:12-CV-480, 
    2014 U.S. Dist. LEXIS 15276
    (S.D. Tex. Feb. 7,
    2014) .............................................................................................................19, 24
    Higginbotham v. State Farm Mutual Automobile Ins. Co.,
    
    103 F.3d 456
    (5th Cir. 1997) ............................................................25, 26, 27, 32
    Home Ins. Co. v. Walter,
    
    230 S.W. 723
    (Tex. Civ. App.—Dallas 1921, no writ) ......................................12
    Hudgens v. Allstate Texas Lloyd's, No. H-11-2716,
    
    2012 U.S. Dist. LEXIS 97446
    (S.D. Tex. July 13, 2012) ......................11, 12, 13
    In re Allstate County Mut. Ins. Co.,
    
    85 S.W.3d 193
    (Tex. 2002).................................................................................10
    In re Slavonic Mut. Fire Ins. Ass'n,
    
    308 S.W.3d 556
    (Tex. App.—Houston [14th Dist.] 2010, no pet.) ...... 23, 24, 25
    Judwin Prop., Inc. v. Griggs & Harrison,
    
    911 S.W.2d 498
    (Tex. App.—Houston [1st Dist.] 1995, no writ) ....................... 8
    Key Life Ins. Co. of S.C. v. Davis,
    
    509 S.W.2d 403
    (Tex. Civ. App.—Beaumont 1974, no writ)............................26
    Lampasas v. Spring Center, Inc.,
    
    988 S.W.2d 428
    (Tex. App.—Houston [14th Dist.] 1999, no pet.) .................8, 9
    Liberty National Fire Insurance. Co. v. Akin,
    
    927 S.W.2d 627
    (Tex. 1996) ........................................................................28, 29
    Lumbermens Mut. Cas. Co. v. Klotz,
    
    251 F.2d 499
    (5th Cir. 1958) ..............................................................................26
    Lundstrom v. USAA,
    
    192 S.W.3d 78
    (Tex. App.—Houston [14th Dist.] 2006, pet. denied) .....5, 11, 14
    Mackie v. McKenzie,
    
    900 S.W.2d 445
    (Tex. App.—Texarkana 1995, writ denied) .............................. 8
    Mag-Dolphus, Inc. v. Ohio Cas. Ins. Co.,
    
    906 F. Supp. 2d 642
    (S.D. Tex. 2012) ......................................................6, 24, 32
    - vi -
    McIntyre v. Wilson,
    
    50 S.W.3d 674
    (Tex. App.—Dallas 2001, pet. denied)........................................ 7
    Medistar Twelve Oaks Partners, Ltd. v. Am. Econ. Ins. Co.,
    No. H-09-3828, 2011 US. Dist. LEXIS 82846 (S.D. Tex. July 27, 2011) ......... 24
    Michels v. Safeco Ins. Co. of Ind.,
    544 Fed. Appx. 535 (5th Cir. 2013)................................................................5, 16
    Michels v. Safeco Ins. Co. of Indiana,
    No. A-12-CA-511-SS (W.D. Tex. March 13, 2013) affirmed by 544 Fed.
    Appx. 535, 542-543 (5th Cir. 2013) ...................................................................24
    MLCSV10 v. Stateside Enters.,
    
    866 F. Supp. 2d 691
    (S.D. Tex. 2012) ....................................................11, 13, 16
    Moore v. Allstate Texas Lloyds,
    No. 7:12-CV-479, 
    2014 U.S. Dist. LEXIS 15277
    (S.D. Tex. Feb. 7,
    2014) .............................................................................................................19, 24
    O'Quinn v. Gen. Star Indem. Co.,
    No. 1:13-CV-471, 
    2014 U.S. Dist. LEXIS 107484
    (E.D. Tex. Aug. 5,
    2014) ...................................................................................................................33
    Providence Lloyds Ins. Co. v. Crystal City Indep. Sch. Dist.,
    
    877 S.W.2d 872
    (Tex. App—San Antonio 1994, no writ) ................. xi, 4, 14, 34
    Providence Wash. Ins. Co. v. Farmers Elevator Co.,
    
    141 S.W.2d 1024
    (Tex. Civ. App.—Amarillo 1940, no writ)............................12
    Provident Am. Ins. Co. v. Castaneda,
    
    988 S.W.2d 189
    (Tex. 1998) ..............................................................................30
    Quibodeaux v. Nautilus Ins. Co.,
    No. 1:10-CV-739, 
    2015 U.S. Dist. LEXIS 39324
    (E.D. Tex. Mar. 10,
    2015) aff'd by 
    2016 U.S. App. LEXIS 12643
    (5th Cir. Jul. 7, 2016)................. 24
    Republic Ins. Co. v. Stoker,
    
    903 S.W.2d 338
    (Tex. 1995) ............................................................28, 29, 31, 32
    Richardson East Baptist Church v. Philadelphia Indemnity Ins. Co.,
    No. 05-14-01491-CV, 2016 Tex. App. LEXIS 3267 (Tex. App.—Dallas
    March 30, 2016) ....................................................................................................5
    - vii -
    Rios v. State Farm Lloyds,
    No. 7:13-CV-00187 (S.D. Tex. Aug. 17, 2015) .................................................24
    Russell v. Scottsdale Ins. Co.,
    No. 4:10-CV-3057, 
    2014 U.S. Dist. LEXIS 143882
    (S.D. Tex. Sept. 30,
    2014) ...............................................................................................................5, 32
    Saenz v. J.D. Rodriguez Produce & Trucking Co.,
    No. 04-99-00867-CV, 2000 Tex. App. LEXIS 8596 (Tex. App.—San
    Antonio Dec. 29, 2000, pet. denied) ...................................................................15
    Scalise v. Allstate Texas Lloyds,
    No. 7:13-CV-178, 
    2013 U.S. Dist. LEXIS 179692
    (S.D. Tex. Dec. 20,
    2013) ............................................................................................................passim
    Smith v. Heard,
    
    980 S.W.2d 693
    (Tex. App.—San Antonio 1998, pet. denied)......................8, 10
    Solis v. State Farm Lloyds,
    No. 7:13-cv-00149 (S.D. Tex. Oct. 27, 2015) ....................................................24
    Spicewood Summit Office Condominiums Ass'n, Inc. v. Amer. First Lloyd's
    Ins. Co.,
    
    287 S.W.3d 461
    (Tex. App.—Austin 2009, pet. denied) ...................................32
    Stewart v. Geovera Specialty Ins. Co.,
    No. H-14-3162 (S.D. Tex. October 21, 2015) ....................................................24
    Strasser v. Sulzer Medica U.S.A., Inc.,
    No. 01-01-00610-CV, 2002 Tex. App. LEXIS 5463 (Tex. App.—
    Houston [1st Dist.] July 25, 2002, pet. denied) ..............................................8, 10
    Studer v. State Farm Lloyds,
    No. 4:13-CV-413, 
    2016 U.S. Dist. LEXIS 99883
    (E.D. Tex. July 29,
    2016) ...................................................................................................................24
    Tabor v. State Farm Lloyds,
    No. 7:14-cv-389 (S.D. Tex. April 9, 2015) ..................................................23, 24
    Tex. Mut. Ins. Co. v. Sara Care Child Care Ctr., Inc.,
    
    324 S.W.3d 305
    (Tex. App.—El Paso 2010, pet. denied) ..................................32
    - viii -
    Texas Dep't. of Pub. Safety v. Mendoza,
    
    952 S.W.2d 560
    (Tex. App.—San Antonio 1997, no writ) ................................12
    TMM Invs., Ltd. v. Ohio Cas. Ins. Co.,
    
    730 F.3d 466
    (5th Cir. 2013) ..............................................................................16
    Toonen v. United Servs. Auto Ass'n,
    
    935 S.W.2d 937
    (Tex. App.—San Antonio 1996, no writ) .......................xi, 4, 18
    Tremago, L.P. v. Euler-Hermes Am. Credit Indem. Co.,
    602 Fed. Appx. 981 (5th Cir. 2015)....................................................... 25, 26, 27
    USAA Texas Lloyds Co. v. Menchaca,
    No. 13-13-00046-CV, 2014 Tex. App. LEXIS 8250 (Tex. App.—Corpus
    Christi July 31, 2014, pet. filed) (mem. op.) ......................................................30
    United National Insurance Co. v. AMJ Investments, LLC
    
    447 S.W.3d 1
    (Tex. App.—Houston [14th Dist.] 2014, pet dism'd) .................. 29
    United Neurology, P.A. v. Hartford Lloyd's Ins. Co.,
    
    101 F. Supp. 3d 584
    (S.D. Tex. 2015), affirmed by 624 Fed. Appx. 225
    (5th Cir. 2015).........................................................................................17, 19, 24
    Vail v. Texas Farm Bureau Mutual Ins. Co.,
    
    754 S.W.2d 129
    (Tex. 1988) ..............................................................................33
    Villanueva v. State Farm Lloyds,
    No. 7:13-CV-00601 (S.D. Tex. Oct. 27, 2015) ..................................................24
    Waite Hill Services, Inc. v. World Class Metal Works, Inc.,
    959 S.w.2d 182 (Tex. 1998) ...............................................................................33
    Walters v. Metro Lloyds Ins. Co.,
    4:16-CV-307, 
    2016 U.S. Dist. LEXIS 91244
    (E.D. Tex. July 14, 2016)........... 33
    Waterhill Cos. v. Great Am. Assur. Co.,
    No. H-05-4080, 
    2006 U.S. Dist. LEXIS 15302
    (S.D. Tex. March 16,
    2006) ...............................................................................................................5, 24
    Wells v. American States Preferred Ins. Co.,
    
    919 S.W.2d 679
    (Tex. App.—Dallas 1996, writ denied) ...................................14
    - ix -
    STATUTES
    Chapter 541 of the Texas Insurance Code ...........................................................x, 32
    Chapter 542 of the Texas Insurance Code .......................................... xii, x, 7, 22, 28
    OTHER AUTHORITIES
    Brad E. Brewer & James W. Holbrook, II, Graber v. State Farm Is a Texas
    Prompt Payment Outlier, Law 360, August 10, 2015,
    http://www.law360.com/articles/686001/graber-v-state-farm-is-a-texas-
    prompt-payment-outlier (last visited July 28, 2016) .........................................25
    -x-
    INTRODUCTION
    This is a hail case that was resolved by the contractual appraisal process.
    Broadly speaking, the appraisal provision allows either party to invoke a process in
    which the amount of the loss is determined by agreement of appraisers selected by
    the insured and insurer and, if necessary, an umpire jointly chosen and mutually
    agreed to by the appraisers or appointed by the court. Garcia made a claim for
    damage to her house under her State Farm Homeowners Policy. State Farm found
    damage that was below the Policy deductible. Garcia disagreed and filed a lawsuit.
    State Farm invoked the appraisal provision in the Policy. Garcia appointed an
    appraiser, as did State Farm, and the parties proceeded to appraisal without
    objection. The appraisers agreed on the amount of loss without the need for an
    umpire. State Farm paid the appraisal award within three (3) business days of
    receipt. State Farm then moved for summary judgment on the broadly stated
    ground that "payment of the appraisal award resolves and disposes of all claims in
    this lawsuit." Before the summary judgment hearing, and following a hearing on
    Garcia's Motion for Continuance of the summary judgment, Garcia amended her
    petition to request, for the first time, that the appraisal award be set aside, and then
    argued to postpone the trial court's ruling on the dispositive appraisal issues based
    on her new defense. The court heard arguments and, after reviewing the briefing,
    granted the summary judgment.
    - xi -
    STATEMENT OF THE CASE
    Nature of the Case:         In connection with an insurance claim for damage to
    her dwelling, Plaintiff Candelaria Garcia asserted
    causes of action against Defendants State Farm and
    Sylvia Garza for breach of contract, bad faith,
    violations of Chapters 541 and 542 of the Texas
    Insurance Code, and violations of the DTPA. Garcia
    later requested the appraisal award signed by her
    designated appraiser be set aside.
    Trial Court:                County Court at Law of Starr County, Texas, the
    Honorable Romero Molina
    Course of Proceedings:      The case was stayed by agreement while the parties
    engaged in the contractual appraisal process. An
    appraisal award was signed, and State Farm paid the
    award. State Farm moved for summary judgment
    dismissing all of Garcia's claims based on its payment
    of the appraisal award.
    Trial Court Disposition:    Summary Judgment was granted dismissing all of
    Garcia's claims.
    - xii -
    RESPONSE ISSUES PRESENTED
    The trial court, following established Texas precedent,1 correctly granted
    summary judgment because payment of the appraisal award disposed of all of
    Garcia's claims.
    Issue 1: Under Texas law, if summary judgment grounds are broad enough
    to contemplate later-pled causes of action, a court can render summary judgment
    on all causes of action without requiring an amended or supplemental motion for
    summary judgment. And a movant for summary judgment is not required to pre-
    emptively negate a non-movant's defenses to the movant's grounds. Here, the
    grounds for the summary judgment expressly stated: "Payment of the appraisal
    award resolves and disposes of all claims in this lawsuit," 2 and concluded that "a
    binding appraisal award was issued" and paid by State Farm leaving "no remaining
    issues."3 Garcia defended by seeking to set aside and disregard the award. The
    trial court did not err by granting summary judgment dismissing all claims because
    the grounds for summary judgment—which centered around the appraisal award—
    were broad enough to contemplate Garcia's later-pled and unsupported defense that
    the appraisal award is invalid.
    Issue 2: A party seeking to set aside an appraisal award has the burden to
    overcome the presumption in favor of enforcing awards. There was no evidence
    that the appraisers acted without authority or signed the award based on fraud,
    mistake, or accident. Garcia's arguments and suspicions about a possible mistake
    are not evidence and did not create a genuine fact issue to avoid summary
    judgment.
    1
    Toonen v. United Servs. Auto Ass'n, 
    935 S.W.2d 937
    , 940 (Tex. App.—San Antonio
    1996, no writ) (holding insurer was entitled to summary judgment on breach of
    contract claim because it tendered appraisal award pursuant to the contract);
    Providence Lloyds Ins. Co. v. Crystal City Indep. Sch. Dist., 
    877 S.W.2d 872
    , 875
    (Tex. App—San Antonio 1994, no writ) (holding trial court erred by allowing a trial
    of a breach of contract claim after insurer promptly paid an appraisal award and
    rendering judgment that insured take nothing); Breshears v. State Farm Lloyds, 
    155 S.W.3d 340
    , 344 (Tex. App.—Corpus Christi 2004, pet. denied) (insurer complied
    with every requirement of contract where it participated in appraisal process and paid
    amount set by appraisers and umpire); Franco v. Slavonic Mut. Fire Ins., 
    154 S.W.3d 777
    , 787 (Tex. App.—Houston [14th Dist.] 2004, no pet.) (holding summary
    judgment dismissing contract claim was proper when insurer paid appraisal award).
    2
    CR 68 (emphasis added).
    3
    CR 76.
    - xiii -
    Issues 3: Payment of an appraisal award disposes of a contract claim as a
    matter of law. Courts have rejected the argument that an insured can avoid
    summary judgment dismissal by refusing to accept payment of an award. Garcia's
    refusal to cash her check is not grounds for reversal.
    Issue 4: Payment of an appraisal award disposes of a contract claim as a
    matter of law. Courts have rejected the argument that the difference between the
    amount of an appraisal award and the amount of a carrier's estimate is evidence of
    a breach of contract. Garcia fails to raise a genuine fact issue by relying on the
    difference between the award and State Farm's estimate.
    Issue 5: Payment of an appraisal award precludes recovery of penalties
    under Chapter 542 of the Texas Insurance Code as a matter of law. Garcia does
    not raise a fact issue to avoid summary judgment.
    Issue 6: The Texas Supreme Court has held that without a breach of
    contract, there is no bad faith, unless the insured proves the insurer committed an
    act so extreme it caused injury independent of the policy claim or the insurer failed
    to timely investigate the insured's claim. Statutory bad faith and DTPA claims
    require the same predicate for recovery and will fail if a common law bad faith
    claim fails. The undisputed evidence conclusively demonstrates there was no
    extreme act by State Farm or adjuster Garza that caused independent injury and the
    claim was timely investigated. The trial court did not err by dismissing all of
    Garcia's extra-contractual claims against State Farm and adjuster Garza.
    - xiv -
    STATEMENT OF FACTS
    Garcia's dwelling in Rio Grande City, Starr County, Texas was insured for
    approximately $88,000.00 (Coverage A dwelling limits) at the time of the loss
    under a State Farm Texas Homeowners Policy. 4 On or about January 22, 2015,
    Garcia reported an insurance claim for her house due to damage from a storm on or
    about May 28, 2014.5 Sylvia Garza, on behalf of State Farm, contacted Garcia on
    January 22, 2015 to get additional information regarding the loss and schedule an
    inspection of the dwelling, which took place on February 28, 2015. 6                After
    inspecting the property, State Farm prepared an estimate of damage finding
    $902.37 in storm-related damage, which was below the Policy's deductible.7
    Garcia filed suit against State Farm and adjuster Garza 8 on or about April 8,
    2015, without making a pre-suit demand.9             On July 21, 2015, State Farm
    demanded appraisal under the Policy, appointing Lee Moynahan as appraiser. 10
    4
    CR 79-137 (Homeowners Policy, with Business Records Affidavit).
    5
    CR 139 (Burrell Affidavit at ¶ 5).
    6
    CR 139 (Burrell Affidavit at ¶ 6).
    7
    CR 139 (Burrell Affidavit at ¶ 6).
    8
    Garcia's claims against Garza are derivative of, and based on, the same alleged facts
    asserted against State Farm.
    9
    CR 10-38 (Plaintiff's Original Petition).
    10
    CR 139 (Burrell Affidavit at ¶ 7); CR 168-69 (Appraisal Demand Letter).
    -1-
    On July 27, 2015, Garcia responded to State Farm's appraisal demand and
    appointed James Wesselski as appraiser.11
    An appraisal award was issued setting the amount of loss at $7,835.70, on a
    replacement cost basis, and $6,142.92, on an actual cash value basis. 12 Appraiser
    Moynahan and appraiser Wesselski both signed the award.13 No umpire was
    needed because the appraisers agreed on the amount of the loss. State Farm
    received the appraisal award on September 23, 2015. 14 Three (3) business days
    later, on September 28, 2015, State Farm timely tendered payment of the award
    (minus depreciation and deductible) in the amount of $4,382.92. 15
    State Farm moved for summary judgment on December 14, 2015, asserting
    broadly that payment of the appraisal award resolved all of Garcia's causes of
    action. 16 A hearing was set on the summary judgment for January 28, 2016. 17 On
    January 21, 2016, the deadline for Garcia to respond to the summary judgment,
    Garcia moved to continue the summary judgment hearing, arguing that she needed
    11
    CR 140 (Burrell Affidavit at ¶ 7); CR 173 (Appraisal Response Letter).
    12
    CR 140 (Burrell Affidavit at ¶ 8); CR 174-182 (Appraisal Award).
    13
    CR 140 (Burrell Affidavit at ¶ 8); CR 174 (Appraisal Award).
    14
    CR 140 (Burrell Affidavit at ¶ 8).
    15
    CR 140 (Burrell Affidavit at ¶ 9); CR 183-84 (Letter Issuing Appraisal Payment).
    16
    CR 68-202.
    17
    CR 203.
    -2-
    time to conduct discovery. 18 The continuance motion said nothing about setting
    aside the appraisal award.       State Farm responded to Garcia's motion for
    continuance, noting that Garcia failed to identify facts or discovery needed that
    could raise a material fact issue related to the summary judgment. 19 The trial court
    heard arguments on Garcia's Motion for Continuance on January 28, 2016. 20 The
    court took the matter under advisement and denied the Motion for Continuance on
    February 9, 2016. 21    Garcia does not appeal the denial of the Motion for
    Continuance.
    After the continuance was denied, the summary judgment was reset for
    hearing on March 3, 2016.22       On February 25, 2016, seven days before the
    summary judgment hearing, Garcia filed her First Amended Petition 23 and her
    Response to Defendants' Motion for Summary Judgment. 24 The First Amended
    Petition still listed the same theories of liability in Section VII—"Cause of Action
    for Breach of Contract," 25 "Cause of Action for Violation of Section 542,"26
    18
    CR 205-217.
    19
    CR 218-226.
    20
    1 RR 4-20.
    21
    CR 226.
    22
    CR 232.
    23
    CR 234-248.
    24
    CR 249-744.
    25
    CR 239.
    26
    CR 240.
    -3-
    "DTPA Cause of Action," 27 "Cause of Action for Unfair Insurance Practices,"28
    and "Cause of Action for Breach of Duty of Good Faith and Fair Dealing."29
    Separately, and not identified as a cause of action, the First Amended Petition
    added a new section, "VIII.        Request to Set Aside and Disregard Appraisal
    Award." 30
    The trial court heard the motion for summary judgment on March 3, 2016.31
    The court granted the motion on March 10, 2016, and entered a final judgment that
    Garcia take nothing on all of her claims. 32 Garcia appealed.
    SUMMARY OF THE ARGUMENT
    This Court has recognized that payment of an appraisal award disposes of an
    insured's claims, and summary judgment dismissing those claims is appropriate.33
    27
    CR 240.
    28
    CR 242.
    29
    CR 243.
    30
    CR 244.
    31
    2 RR 4-18.
    32
    CR 751.
    33
    Toonen v. United Servs. Auto Ass'n, 
    935 S.W.2d 937
    , 940 (Tex. App.—San Antonio
    1996, no writ) (holding insurer was entitled to summary judgment on breach of
    contract claim because it tendered appraisal award pursuant to the contract);
    Providence Lloyds Ins. Co. v. Crystal City Indep. Sch. Dist., 
    877 S.W.2d 872
    , 875
    (Tex. App—San Antonio 1994, no writ) (holding trial court erred by allowing a trial
    of a breach of contract claim after insurer promptly paid an appraisal award and
    rendering judgment that insured take nothing).
    -4-
    Many other Texas courts 34 and Federal courts in Texas 35 have held the same.
    Garcia first tries to avoid this settled law by arguing a technical, procedural issue—
    34
    Anderson v. American Risk Ins. Co., No. 01-15-00257-CV, 2016 Tex. App. LEXIS
    6538, at *11 (Tex. App.—Houston [1st Dist.] June 21, 2016, no pet. h.) (affirming
    summary judgment dismissing all claims based on payment of appraisal award);
    
    Breshears, 155 S.W.3d at 344
    (affirming summary judgment dismissing contractual
    and extra-contractual claims after payment of appraisal award); 
    Franco, 154 S.W.3d at 787
    (holding summary judgment dismissing contract claim was proper when
    insurer paid appraisal award); Gardner v. State Farm Lloyds, 
    76 S.W.3d 140
    , 143-44
    (Tex. App.—Houston [1st Dist.] 2002, no pet.) (holding trial court properly rendered
    summary judgment for insurer based on appraisal award that required no payment to
    be made); Lundstrom v. USAA, 
    192 S.W.3d 78
    , 87, 95 (Tex. App.—Houston [14th
    Dist.] 2006, pet. denied) (affirming summary judgment dismissing breach of contract
    claim based on appraisal award); Richardson East Baptist Church v. Philadelphia
    Indemnity Ins. Co., No. 05-14-01491-CV, 2016 Tex. App. LEXIS 3267, at *7-12
    (Tex. App.—Dallas March 30, 2016) (affirming summary judgment dismissing
    breach of contract claim based on appraisal award).
    35
    Blum's Furniture Co. v. Certain Underwriters at Lloyds London, 459 Fed. Appx.
    366, 369 (5th Cir. 2012) (affirming summary judgment dismissing breach of contract
    claim following payment of appraisal award and noting "it seems clear that Lloyds
    did not breach its contract with Blum's"); Michels v. Safeco Ins. Co. of Ind., 544 Fed.
    Appx. 535, 542 (5th Cir. 2013) (affirming district court's granting of summary
    judgment after payment of appraisal award); Burks v. Metro Lloyds Ins. Co. of Tex.,
    No. H-14-591, 
    2015 U.S. Dist. LEXIS 88729
    , at *9-11 (S.D. Tex. July 8, 2015)
    (granting summary judgment after payment of appraisal award); Scalise v. Allstate
    Texas Lloyds, No. 7:13-CV-178, 
    2013 U.S. Dist. LEXIS 179692
    , at *13-16 (S.D.
    Tex. Dec. 20, 2013) (granting summary judgment dismissing breach of contract
    claim based on payment of appraisal award); Russell v. Scottsdale Ins. Co., No. 4:10-
    CV-3057, 
    2014 U.S. Dist. LEXIS 143882
    , *17 (S.D. Tex. Sept. 30, 2014) (granting
    summary judgment because insured is estopped from asserting breach of contract
    when insurer pays appraisal award); Barry v. Allstate Tex. Lloyds, No. 4:14-cv-
    00870, 
    2015 U.S. Dist. LEXIS 40953
    , at *8-11 (S.D. Tex. Mar. 31, 2015) (granting
    summary judgment after payment of appraisal award); Caso v. Allstate Tex. Lloyds,
    No. 7:12-CV-478, 
    2014 U.S. Dist. LEXIS 15279
    , at *14-24 (S.D. Tex. Feb. 7, 2014)
    (granting summary judgment because insurer's payment of appraisal award estopped
    insured's breach of contract claim); Waterhill Cos. v. Great Am. Assur. Co., No. H-
    05-4080, 
    2006 U.S. Dist. LEXIS 15302
    , at *8 (S.D. Tex. March 16, 2006) (granting
    summary judgment after insurer paid appraisal award); Gabriel v. Allstate Texas
    Lloyds, No. 7:13-CV-181, 
    2013 U.S. Dist. LEXIS 186032
    , at *12 (S.D. Tex. Nov. 1,
    -5-
    that Garcia amended her petition seven days before the hearing, requiring an
    amended or supplemental summary judgment to be filed and the hearing reset. But
    Garcia did not assert a new cause of action, and Texas courts recognize an
    exception to this general rule when the grounds stated in the original summary
    judgment are broad enough to include the newly pled claim. Here, that is the case.
    Payment of the valid appraisal award was the basis of the summary judgment
    motion. Also, Garcia's request to set aside was raised as a defense to State Farm's
    estoppel defense based on the appraisal award. Thus, State Farm, as the movant
    for summary judgment, was not required to pre-emptively negate Garcia's defense
    to summary judgment.
    Garcia also argues the substantive issues. Garcia speculates that the award
    was made without authority or was the result of fraud, accident, or mistake,
    rendering it invalid. But there is no evidence that the appraisers acted without
    authority or were tainted by fraud, accident, or mistake. Garcia did not offer an
    affidavit from her own appraiser—who signed the award—saying he had made a
    mistake or acted improperly.      Garcia's position is based on arguments, not
    evidence. Garcia makes other arguments—that she can refuse to accept State
    Farm's payment of the award to avoid summary judgment, that the difference
    2013) (granting summary judgment after payment of appraisal award); Mag-Dolphus,
    Inc. v. Ohio Cas. Ins. Co., 
    906 F. Supp. 2d 642
    , 652 (S.D. Tex. 2012) (granting
    summary judgment after payment of appraisal award).
    -6-
    between State Farm's original estimate and the later appraisal award is evidence of
    a breach of contract, that she should be allowed to recover Chapter 542 penalties
    on top of the award amount, and that her extra-contractual claims survive even if
    she has no breach of contract claims. But all of these arguments have been made
    before by many other parties, and they have been rejected before by many other
    courts. 36
    ARGUMENT
    I.        The summary judgment grounds are broad enough to contemplate
    Garcia's later-pled defense to set aside the appraisal award, and State
    Farm was not required to pre-emptively negate Garcia's defense.
    Garcia's primary argument seeks to avoid the substantive issues in this
    appeal based on a technical issue. But Garcia fails to address or even acknowledge
    that Texas courts recognize an exception to the general rule upon which Garcia
    relies:
    Although summary judgment generally may not be granted on a claim
    not addressed in the summary judgment proceeding, it may be granted
    on later pleaded causes of action if the grounds asserted in the motion
    show that the plaintiff could not recover from the defendant on the
    later pleaded cause of action. 37
    ***
    This Court has recognized an exception to the rule that a movant must
    amend or supplement its summary judgment motion expressly to
    address claims pled after the original motion's filing. If the summary
    36
    See Argument Sections III, IV, V, and 
    VI, supra
    .
    37
    McIntyre v. Wilson, 
    50 S.W.3d 674
    , 684-85 (Tex. App.—Dallas 2001, pet. denied).
    -7-
    judgment grounds are broad enough to contemplate all causes of
    action later pled, then summary judgment may properly be rendered
    on the later claims even without an amended or supplemental
    motion.38
    This Court adopted the exception in Smith v. Heard:
    Courts have granted summary judgments on causes of action not
    specifically addressed in a movant's motion if the movant has
    conclusively disproven an ultimate fact which is central to all causes
    of action alleged, or the unaddressed causes of action are derivative of
    the addressed cause of action. 39
    The genesis of the general rule upon which Garcia relies is based on the
    language in Rule 166a(c) that requires a party to state the specific grounds upon
    which they are entitled to judgment. 40 Generally, if a plaintiff adds new causes of
    action after a summary judgment is filed, the movant could not have known to
    include grounds on the new cause of action. But if the summary judgment is
    sufficiently broad, "it may be deemed to cover additional causes of action under
    appropriate fact situations." 41 Thus, in Farah v. Mafrige & Kormanik, the court
    38
    Strasser v. Sulzer Medica U.S.A., Inc., No. 01-01-00610-CV, 2002 Tex. App. LEXIS
    5463, at *6 (Tex. App.—Houston [1st Dist.] July 25, 2002, pet. denied).
    39
    See Smith v. Heard, 
    980 S.W.2d 693
    , 697 (Tex. App.—San Antonio 1998, pet.
    denied) (citing TIMOTHY PATTON, SUMMARY JUDGMENTS IN TEXAS--
    PRACTICE, PROCEDURE AND REVIEW § 3.06[3] (2d ed. 1996); Judwin Prop.,
    Inc. v. Griggs & Harrison, 
    911 S.W.2d 498
    , 502-503 (Tex. App.—Houston [1st
    Dist.] 1995, no writ); Mackie v. McKenzie, 
    900 S.W.2d 445
    , 451 (Tex. App.—
    Texarkana 1995, writ denied); Cissne v. Robertson, 7
    82 S.W.2d 912
    , 918 (Tex.
    App.—Dallas 1989, writ denied)).
    40
    Lampasas v. Spring Center, Inc., 
    988 S.W.2d 428
    , 435-36 (Tex. App.—Houston
    [14th Dist.] 1999, no pet.).
    41
    
    Lampasas, 988 S.W.2d at 436
    .
    -8-
    held that a summary judgment motion seeking to dismiss fraud claims was broad
    enough to include a later-added claim for negligent misrepresentation. 42 But the
    court also found that a newly pleaded cause of action for promissory estoppel was
    not within the summary judgment grounds. 43 In AKB Hendrick, LLP v. Musgrave
    Enters., the court affirmed summary judgment dismissing a later pleaded negligent
    misrepresentation claim because the grounds asserted against the plaintiff's fraud
    claim showed the plaintiff could not recover on the negligent misrepresentation
    claim. 44
    Here, the validity of the appraisal award is central to State Farm's and
    adjuster Garza's motion for summary judgment. The entire basis of the motion was
    State Farm's payment of a valid appraisal award. It stretches credulity for Garcia
    to now argue that these grounds "were not addressed in the motion for summary
    judgment." 45 And this is contrary to Garcia's previous acknowledgment that the
    validity of the appraisal award was already squarely before the trial court as part of
    State Farm's summary judgment. 46 State Farm offered the signed appraisal award
    42
    
    927 S.W.2d 663
    , 671-672 (Tex. App.—Houston [1st Dist.] 1996, no writ).
    43
    Id.
    44
    
    380 S.W.3d 221
    , 237-38 (Tex. App.—Dallas 2012, no pet.).
    45
    Appellant's Brief at p. 8.
    46
    2 RR 14 ("If the appraisal--if there's a question about the validity of the Appraisal
    Award, then that raises questions about whether they can even prove the first element
    of their estoppel defense, whether there's a valid and binding Appraisal Award.").
    -9-
    in evidence,47 and alleged that it was a binding award.48 Under Texas law, the
    award is presumed valid. 49 State Farm met its burden.
    It is questionable whether Garcia's later-amended petition even qualifies
    under the general rule requiring a summary judgment to be amended. Garcia did
    not add a cause of action, but rather a "Request to Set Aside and Disregard
    Appraisal Award" separate from her "Causes of Action," and it was plead as a
    defense to State Farm's estoppel defense and summary judgment. 50 In Smith, this
    Court implicitly recognized that the general rule may not apply when a plaintiff
    pleads an affirmative defense as opposed to a cause of action.51 And courts
    recognize that a summary judgment movant is not required to address the non-
    movant's defenses, because it is incumbent upon the non-movant to raise a genuine
    material fact issue on the elements of the non-movant's defense.52 Once State
    Farm proved its defense to Garcia's claims based on its payment of the binding
    47
    CR 174.
    48
    CR 76 ("Appraisal has concluded and a binding appraisal award was issued setting
    the amount of loss.").
    49
    In re Allstate County Mut. Ins. Co., 
    85 S.W.3d 193
    , 195 (Tex. 2002).
    50
    See, e.g., Strasser, 2002 Tex. App. LEXIS 5463, at *17 (recognizing that fraudulent
    concealment is a defense to a defendant's limitations defense).
    51
    
    Smith, 980 S.W.2d at 697
    (noting that failure of consideration in amended pleading
    was a defense not a cause of action, but applying general rule to other newly added
    cause of action under Texas Debt Collection Practices Act).
    52
    Cook Composites v. Westlake Styrene Corp., 
    15 S.W.3d 124
    , 139 (Tex. App.—
    Houston [14th Dist.] 2000, pet. dism'd).
    - 10 -
    appraisal award, it was Garcia's burden to plead and raise a fact issue on her
    defense that the award is invalid.
    The validity of the appraisal award raised by Garcia in her First Amended
    Petition was already central to State Farm's summary judgment motion. Thus, the
    trial court did not err by ruling on the substantive merit of the parties' claims and
    defenses.
    II.     No material fact issues existed.
    Texas law presumes the appraisal award is valid, and it was Garcia's burden
    to prove a valid ground for setting aside the award.53 When a party does not
    produce evidence showing grounds to set aside the appraisal award, the award is
    presumed valid and should be enforced as a matter of law. 54 Garcia argues that the
    award should be set aside because the award was made without authority or was
    53
    
    Franco, 154 S.W.3d at 786
    ; 
    Lundstrom, 192 S.W.3d at 87
    .
    54
    See Hudgens v. Allstate Texas Lloyd's, No. H-11-2716, 
    2012 U.S. Dist. LEXIS 97446
    , at *27 (S.D. Tex. July 13, 2012) (granting insurer's post-appraisal motion for
    summary judgment after finding that "Plaintiff has failed to produce any evidence
    showing the grounds required to set aside the appraisal award"); Cantu v. S. Ins. Co.,
    No. 03-14-00533-CV, 2015 Tex. App. LEXIS 8847, at *20 (Tex. App.—Austin Aug.
    25, 2015, no pet.) ("Cantu produced no evidence that the appraisers and umpires did
    not comply with the requisite procedure and did not meet that burden [to set the
    award aside]"); MLCSV10 v. Stateside Enters., 
    866 F. Supp. 2d 691
    , 708 (S.D. Tex.
    2012) (granting summary judgment for insurer, finding that insured had presented no
    evidence that award was invalid); 
    Breshears, 155 S.W.3d at 344
    ("Thus, because
    there is no evidence showing grounds to set aside the appraisal award, the trial court
    did not err in granting summary judgment on this issue").
    - 11 -
    the result of fraud, accident, or mistake. But Garcia only offers arguments, not
    evidence.55 She did not meet her burden to raise a genuine issue of material fact.
    To set aside an award on the ground of fraud, accident, or mistake, Garcia
    must prove that the award was not the intended result of the appraisers who signed
    the award or the appraisers were incompetent, interested, or partial. 56 There is no
    evidence that the award does not reflect the intent of appraiser Wesselski or
    appraiser Moynahan.57 Garcia speculates that because the appraisal award's scope
    differs in some ways from the State Farm estimate, the award does not reflect the
    intent of the appraisers. But allegations and speculation are not evidence. For
    example, in Hudgens, the court held that the plaintiff's allegations of misconduct in
    55
    Texas Dep't. of Pub. Safety v. Mendoza, 
    952 S.W.2d 560
    , 564 (Tex. App.—San
    Antonio 1997, no writ) ("argument of counsel is not evidence.").
    56
    See Providence Wash. Ins. Co. v. Farmers Elevator Co., 
    141 S.W.2d 1024
    , 1026-27
    (Tex. Civ. App.—Amarillo 1940, no writ) (trial court judgment setting aside an
    award by two appraisers and an umpire reversed and rendered in part because there
    was no mistake—award was intended result); Continental Ins. Co. v. Guerson, 
    93 S.W.2d 591
    , 594 (Tex. Civ. App.—San Antonio 1936, writ dism'd) (court cannot
    concern itself where the award embodies the appraisers real judgment); Gulf Ins. Co.
    of Dallas v. Pappas, 
    73 S.W.2d 145
    , 146-47 (Tex. Civ. App.—San Antonio 1934,
    writ ref'd) (court will not substitute its own award for that of the appraisers unless the
    mistake is one by which the award fails to operate in a way the appraisers intended);
    Home Ins. Co. v. Walter, 
    230 S.W. 723
    , 724 (Tex. Civ. App.—Dallas 1921, no writ)
    (an award which is the result of fraud, mistake or accident means one which was
    made by appraisers who were incompetent, interested or partial).
    57
    Garcia makes no argument that either appraiser committed fraud, was incompetent,
    interested, or partial.
    - 12 -
    the appraisal were not competent evidence, and that the plaintiff therefore failed as
    a matter of law to satisfy its burden of proof to set aside the award. 58
    To set aside an award for lack of authority, Garcia had the burden to prove
    that the appraisers made improper legal determinations of what is or is not a
    covered loss.59 Garcia offers no legal support for the proposition that appraisers
    are bound by prior estimates or must use them as a starting point when determining
    the extent or amount of loss. A federal court in Wisconsin has expressly rejected
    this argument: "Once the appraisal was confirmed, any previous estimates from
    [the insurer's restoration company] or anyone else became meaningless, and the
    only damages estimate that mattered was the appraisal award." 60 Under the Policy,
    the appraisers are not bound by pre-appraisal estimates, but rather have a duty to
    make an independent determination of the amount of loss:
    4. Appraisal. …If either makes a written demand for
    appraisal, each shall select a competent, disinterested
    appraiser…. The appraisers shall then set the amount of
    the loss. If the appraisers submit a written report of
    58
    Hudgens, 
    2012 U.S. Dist. LEXIS 97446
    , at *26-27; see also Scalise, 2014 U.S. Dist.
    LEXIS 49419, at *7 (where an award was valid on its face, court "could not have
    discerned from the appraiser estimates and award made part of the summary
    judgment record whether either individual impermissibly refused to inspect or
    consider the damages…").
    59
    
    MLCSV10, 866 F. Supp. 2d at 705-06
    .
    60
    Gronik v. Chubb Indem. Ins. Co., 10-CV-954, 11-CV-697, 
    2015 U.S. Dist. LEXIS 157266
    , at *8 (E.D. Wis. Nov. 20, 2015).
    - 13 -
    an agreement to us, the amount agreed upon shall be
    the amount of loss…. 61
    The Policy requires the appraisers to make a disinterested evaluation of the
    loss and clearly states that the appraisers' agreement—not prior estimates—"shall
    be the amount of loss." In other words, the appraisal award controls over the prior
    estimates. 62 Garcia's reliance on Wells v. American States Preferred Ins. Co. 63 and
    Lundstrom v. United Services Auto Association—CIC64 is misplaced.65 In Wells,
    the appraisal panel expressly made coverage decisions as part of the award. 66 That
    did not happen here. In Lundstrom, the court affirmed the summary judgment on
    the ground that appraisal resolved the contract claim and rejected the plaintiff's
    broad interpretation of Wells, noting no coverage issues were before the appraisal
    panel.67 Garcia's opinion that the award should have included additional items is
    61
    CR 106 (emphasis added).
    62
    Similarly, when appraisers disagree, an umpire is not constrained to choose between
    them, but must exercise her independent judgment. See, e.g., Providence Lloyds Ins.
    
    Co., 877 S.W.2d at 877-878
    ("we find that in acting independently as to the disputed
    values, the umpire did not exceed the authority conferred upon him. On the contrary,
    it was the duty of the umpire under the terms of the contract of insurance to ascertain
    and determine, in the exercise of his own judgment and as the result of his own
    investigation, the cost values of the disputed items, independent of the findings of the
    appraisers, or either of them.").
    63
    
    919 S.W.2d 679
    , (Tex. App.—Dallas 1996, writ denied).
    64
    
    192 S.W.3d 78
    (Tex. App.—Houston [14th Dist.] 2006, pet. denied).
    65
    Appellant's Brief at pp. 16-17.
    66
    
    Wells, 919 S.W.2d at 685
    (umpire and appraiser exceeded authority by determining
    foundation movement was not caused by a plumbing leak).
    67
    
    Lundstrom, 192 S.W.3d at 87
    -89.
    - 14 -
    not evidence that the award was made without authority and does not reflect that
    the award was the result of fraud, accident, or mistake.
    Garcia argues the appraisers either made coverage decisions without
    authority or made a mistake because they did not award her $397.72 for three items
    that were in State Farm's original estimate. Garcia had seventy-three days from the
    day that State Farm moved for summary judgment until her evidentiary deadline
    seven days before the March 3, 2016 summary judgment hearing to support her
    speculation with evidence—such as an affidavit from appraiser Wesselski (whom
    she appointed) that he was mistaken or that he made coverage decisions. But
    Garcia offered no such evidence. Instead, Garcia relies only on her arguments and
    speculation about what the appraisers might have done or intended by comparing
    what is in the award and what is in State Farm's original estimate. But summary
    judgment cannot be avoided by a non-movant when the "application of . . .
    evidence relies upon speculation rather than reasonable inference." 68 That the
    appraisal award did not include a $43 turtle vent or $354 for ceiling paint in two
    68
    Bluebonnet Petroleum, Inc. v. Kolkhorst Petroleum Co., No. 14-07-00380-CV, 2008
    Tex. App. LEXIS 7724, at *26-27 (Tex. App.—Houston [14th Dist.] Oct. 9, 2008,
    pet. denied) (affirming summary judgment dismissing conspiracy claim because no
    evidence of content of phone calls was offered and the proffered application of
    evidence—i.e., that the existence of the phone calls was circumstantial evidence that
    the parties conspired—relied upon speculation rather than reasonable inference); see
    also Saenz v. J.D. Rodriguez Produce & Trucking Co., No. 04-99-00867-CV, 2000
    Tex. App. LEXIS 8596, at *20 (Tex. App.—San Antonio Dec. 29, 2000, pet. denied)
    (argument that summary judgment evidence raised a reasonable inference was merely
    suspicion and speculation).
    - 15 -
    rooms is no evidence that the appraisers acted without authority or signed an award
    as a result of fraud, accident or mistake. Garcia only speculates that is the case. 69
    But her speculation does not raise a genuine fact issue.
    III.     Garcia cannot avoid summary judgment by choosing not to cash her
    appraisal award check.
    State Farm tendered payment under the appraisal award within three
    business days of receiving the award.70 Garcia's counsel purported to reject the
    payment, arguing that State Farm needed to confess "to their liability" before
    Garcia would accept the check and that Garcia should have received the amount of
    the appraisal award originally without having to go to appraisal.71 Garcia now
    argues that her refusal to accept payment prevents summary judgment from being
    entered against her.        Numerous courts have found that a party cannot avoid
    69
    Even if the Court were to indulge Garcia's speculation (which State Farm asserts is
    without merit), the $397 amount is a minor discrepancy that does not justify setting
    aside the award. Michels, 544 Fed. Appx. at 541 ("minor discrepancies in the
    appraisal process or award do not invalidate the award"); TMM Invs., Ltd. v. Ohio
    Cas. Ins. Co., 
    730 F.3d 466
    , 472 (5th Cir. 2013) ("minor mistakes that do not taint
    the entire award should not frustrate the parties' intent to be bound by the appraisal
    provision of their contract."). And if Garcia's speculation about the $397 could
    justify setting aside the award (which State Farm asserts is without merit), only that
    portion of the award would be set aside. See 
    MLCSV10, 866 F. Supp. 2d at 707-708
           (noting that only part of the appraisal award might be set aside and "there is,
    however, no basis for setting aside the entire award or any other part of it."). Thus,
    the remainder of the award would remain intact, all of Garcia's ensuing causes of
    action related to those parts of the award would still be disposed of by summary
    judgment, and at most Garcia would go to trial seeking to prove the $397 amount not
    in the award was omitted without authority or by fraud, accident, or mistake.
    70
    CR 183.
    71
    CR 729.
    - 16 -
    summary judgment by refusing to accept payment of an appraisal award. In
    United Neurology, P.A. v. Hartford Lloyd's Ins. Co., the federal court pointed out
    that several courts have rejected Garcia's argument:
    United Neurology now argues that the third element required to estop
    its breach of contract claim was not met because it did not accept the
    payment of the appraisal award tendered to it by Hartford. A number
    of courts have addressed the issue of the insured's rejection of a timely
    and full payment of the appraisal award amount by the insurer under
    Texas law and determined that if the appraisal award has been reached
    in accordance with the terms of the insurance policy and the insurer
    has timely tendered the full amount awarded by the appraisers, that
    conduct is legally sufficient to entitle the insurer to summary
    judgment on the breach-of-contract claim against it. This Court, too,
    finds that United Neurology and Hartford are in substantial
    compliance with the appraisal award clause in the Policy, that the
    award is binding and enforceable, and that despite United Neurology's
    refusal to accept the payment tendered, it has failed to show that
    Hartford breached the contract.72
    In Devonshire Real Estate & Asset Management, L.P. v. American
    Insurance Co., the court rejected the argument advanced by Garcia that she can
    block a summary judgment by not accepting payment:
    Finally, the Court refuses to accept Devonshire's argument that
    American cannot raise an estoppel defense because Devonshire never
    accepted payment of the appraisal award issued by American. . . . The
    Court therefore concludes that so long as there is a binding and
    enforceable appraisal award and the insurer timely and full[ly] pays
    72
    United Neurology, P.A. v. Hartford Lloyd's Ins. Co., 
    101 F. Supp. 3d 584
    , 619-20
    (S.D. Tex. 2015).
    - 17 -
    the resulting award, estoppel should apply regardless of whether the
    insured actually accepts payment. 73
    Similarly, in Caso v. Allstate Texas Lloyds, the court granted summary
    judgment notwithstanding the insured's rejection of payment:
    Plaintiffs do not dispute the first and second elements, but attack the
    third, i.e. acceptance of the award, by asserting that Plaintiffs' non-
    acceptance of Allstate's tender of the appraisal award prevents
    estoppel. In support, Plaintiffs cite language from a district court
    decision, Church of the Rock North v. Church Mut. Ins. Co., providing
    that estoppel via appraisal only results where the plaintiff accepts
    payment of the appraisal amount from the insurer. However, the
    Church of the Rock requirement of acceptance for estoppel
    effectiveness was due to distinguishable facts of that case . . . the
    award remains both binding and enforceable until it is set aside,
    notwithstanding Plaintiffs' rejection of Allstate's tender, an
    apparently-baseless rejection for which Plaintiffs have not offered an
    explanation. 74
    Like the insured in Caso, Garcia relies on Church on the Rock North v.
    Church Mut. Ins. Co.75 to support her position. The Court in Caso explained that
    Church on the Rock was distinguishable due to peculiar language in that appraisal
    clause and unique factual disputes about the enforceability of the award, which was
    not signed.76 Notably, the court in Caso relied on this Court's opinion in Toonen to
    reject the argument that an insured has to accept the check:
    73
    Devonshire Real Estate & Asset Mgmt., L.P. v. Am. Ins. Co., No. 3:12-CV-2199-B,
    
    2014 U.S. Dist. LEXIS 135939
    , at *51, *53 (N.D. Tex. Sep. 26, 2014).
    74
    No. 7:12-CV-478, 
    2014 U.S. Dist. LEXIS 15279
    , at *18-20 (S.D. Tex. Feb. 7, 2014).
    75
    No. 3:10-CV-0975-L, 
    2013 U.S. Dist. LEXIS 17849
    (N.D. Tex. Feb. 11, 2013).
    76
    Caso, 
    2014 U.S. Dist. LEXIS 15279
    , at *18.
    - 18 -
    Regarding a factually-similar situation in Toonen v. United Servs.
    Auto. Ass'n, a Texas court of appeals rejected a similar argument,
    writing:
    In this case, USAA's motion and supporting proof are legally
    sufficient to establish (1) Toonen's claim had been appraised
    pursuant to the Policy, and (2) USAA had tendered the amount
    awarded by the appraisers. Accordingly, USAA was entitled to
    summary judgment in its favor on Toonen's breach of contract
    claim unless Toonen raised an issue of fact as to a ground for
    setting aside the appraisal award.77
    The court in Devonshire also explained that the reasoning in Church on the
    Rock was based on an over-reading of Franco, which "did not expressly state, as
    Church on the North Rock and Blum's Furniture appear to suggest, that the
    insured's acceptance of payment was a necessary condition for estoppel to apply." 78
    Several other cases have likewise rejected an insured's attempt to avoid summary
    judgment by not accepting payment and citing Church on the Rock. 79
    Garcia also argues that she rejected the appraisal payment because it was for
    the Actual Cash Value of the award, instead of the full Replacement Cost Value.80
    Actually, Garcia never raised this issue at the trial court. She tries to add the new
    argument on appeal—saying "it can be reasonably inferred" from her letter that she
    77
    Caso, 
    2014 U.S. Dist. LEXIS 15279
    , at *20-21.
    78
    Devonshire Real Estate, 
    2014 U.S. Dist. LEXIS 135939
    , at *52.
    79
    See Moore v. Allstate Texas Lloyds, No. 7:12-CV-479, 
    2014 U.S. Dist. LEXIS 15277
    , at *18 (S.D. Tex. Feb. 7, 2014); Hernandez v. Allstate Texas Lloyds, No.
    7:12-CV-480, 
    2014 U.S. Dist. LEXIS 15276
    , at *18 (S.D. Tex. Feb. 7, 2014); United
    
    Neurology, 101 F. Supp. 3d at 620
    , n.37.
    80
    Appellant's Brief at p. 23.
    - 19 -
    speculated State Farm might not later pay replacement cost benefits if she
    completed repairs, and therefore, she rejected the payment. This argument (even if
    it had been properly raised by Garcia) has also been rejected. In Devonshire, the
    court held that "the plain terms of the policy only required American to pay the
    actual cash value of the appraisal award, because Devonshire had not completed
    repairs."81 Garcia offers no argument or evidence that she completed repairs.
    Accordingly, she is not entitled to replacement cost benefits under the policy. 82
    Garcia argues (again) that State Farm cannot defeat her claims by estoppel
    because it cannot show the existence of a valid appraisal award. 83              Garcia
    incorporates the earlier sections of her brief, arguing State Farm did not amend its
    motion after Garcia amended her petition and that fact issues exist on her grounds
    to set aside the award. 84 State Farm, in turn, incorporates its prior arguments on
    these points.     The broadly stated summary judgment grounds covered the
    enforceability of the award, and State Farm did not have to pre-emptively negate
    Garcia's defense. 85 And Garcia offers no evidence to raise a fact issue, only
    81
    
    2014 U.S. Dist. LEXIS 135939
    , at *49.
    82
    Fitzhugh 25 Partners, L.P. v. KILN Syndicate, 501, 
    261 S.W.3d 861
    , 863 (Tex.
    App.—Dallas 2008, pet. denied) ("Courts across the country have universally held
    that [a replacement cost provision] requires repair or replacement of the destroyed
    property before the insured is entitled to recover replacement cost damages.")
    83
    Appellant's Brief at p. 22.
    84
    
    Id. 85 See
    Argument Section I, supra.
    - 20 -
    arguments.86 State Farm satisfied its burden by offering the signed appraisal
    award, which is presumed valid. It is Garcia's burden of proof to set aside the
    award. She cannot shift the burden to State Farm to pre-emptively disprove her
    defense.
    IV.     Under Texas law, the fact that an appraisal award is greater than an
    earlier estimate is no evidence of a breach of contract.
    Under Texas law, the fact that an insurer paid less under its original estimate
    than it later paid under a signed appraisal award cannot be used to argue the insurer
    breached the contract. 87 Garcia tries to make exactly this argument. 88 Garcia
    points to the differences between her public adjuster's estimate, State Farm's
    estimate, and the appraisal award. 89 Garcia also complains that State Farm did not
    include overhead and profit in its estimate, but the appraisers did. 90 But attacking
    86
    See Argument Section 
    II, supra
    .
    87
    Gabriel, 
    2013 U.S. Dist. LEXIS 186032
    , at *11; 
    Breshears, 155 S.W.3d at 343
    ("The
    Breshears may not use the fact that the appraisal award was different than the amount
    originally paid as evidence of breach of contract, especially when the contract they
    claim is being breached provides for resolution of disputes through appraisal.").
    88
    Appellant's Brief at pp. 24-27.
    89
    
    Id. at p.
    25.
    90
    
    Id. at pp.
    25-26. As discussed in footnote 91 below, an incongruity between an
    estimate and an appraisal award is not germane to the issues presented in this appeal.
    Nevertheless, it is important to note that Garcia misrepresents the TDI Bulletins cited
    in her brief. Appellant's Appendix I. The bulletins do not stand for the proposition
    that overhead and profit be included in every loss estimate. They only express TDI’s
    opinion that depreciation and overhead and profit cannot both be deducted from
    replacement cost value when calculating actual cash value.
    - 21 -
    the original estimate as being insufficient does not raise a fact issue when the
    appraisal award later sets the amount of loss and is paid. 91
    The Houston Court of Appeals in Anderson recently rejected the argument
    that the award can prove the insurer breached the contract: "The fact that ARIC did
    not pay the amount of the award earlier, alone, does not raise a fact issue on
    Anderson's claim for breach of contract." 92 Garcia failed to prove any fact issues
    prevented summary judgment dismissing her contract claim.
    V.     Payment of the appraisal award disposes of Garcia's prompt payment
    claims as a matter of law.
    Garcia argues that a cause of action under the Texas Prompt Payment of
    Claims Act, Chapter 542 Tex. Ins. Code ("TPPCA"), can be maintained after an
    insurer timely pays an appraisal award. Courts have already decided that issue,
    recognizing that "Texas courts have constantly held that 'full and timely payment
    of an appraisal award under the policy precludes an award of penalties under the
    91
    Gabriel, 
    2013 U.S. Dist. LEXIS 186032
    , at *11 ("For her part, Gabriel argues that
    Breshears is 'easily distinguished' from this case since the Breshears plaintiffs
    asserted claims 'because the amount of the appraisal award was different from the
    amount initially offered by the insurance company.' Gabriel goes on, however, to
    describe the same basis for her own claims, albeit with different wording: Allstate
    breached the contract when it 'failed to correctly determine the amount of the loss
    that led to the coverage dispute.'").
    92
    2016 Tex. App. LEXIS 6538, at *11.
    - 22 -
    Insurance Code's prompt payment provisions as a matter of law.'" 93 Garcia relies
    on a recent interlocutory Order from a Northern District of Texas case that was
    voluntarily dismissed by the plaintiff, Graber v. State Farm Lloyds, 94 that is at
    odds with Fifth Circuit precedent, Southern, Eastern and Western District
    precedent, and precedent from Texas courts of appeals.
    A.     The overwhelming majority of courts have found that TPPCA
    claims do not survive payment of an appraisal award.
    The Fifth Circuit, in Blum's Furniture Co. v. Certain Underwriters at Lloyds
    London, upheld the summary judgment dismissal of the plaintiff insured's
    contractual and extra-contractual claims, affirming the district court's summary
    judgment. 95 The district court held that "under Texas law, 'full and timely payment
    of an appraisal award under the policy precludes an award of penalties under the
    Insurance Code's prompt payment provisions as a matter of law.' Because Lloyds
    made full and timely payment of the appraisal award in this case, Plaintiffs' Prompt
    Payment claim fails as a matter of law." 96
    93
    Tabor v. State Farm Lloyds, No. 7:14-cv-389, at pp. 15-16 (S.D. Tex. April 9, 2015)
    (quoting In re Slavonic Mut. Fire Ins. Ass'n, 
    308 S.W.3d 556
    , 563 (Tex. App.—
    Houston [14th Dist.] 2010, no pet.)).
    94
    Graber v. State Farm Lloyds, No. 3:13-CV-2671-B, 
    2015 U.S. Dist. LEXIS 77361
         (N.D. Tex. June 15, 2015) reconsideration denied (August 6, 2015) (dismissed
    voluntarily by plaintiff).
    95
    459 Fed. Appx. at 368.
    96
    Blum's Furniture Co. v. Certain Underwriters at Lloyds London, No. H-09-3479,
    
    2011 U.S. Dist. LEXIS 20604
    , at *11 (S.D. Tex. March 2, 2011) affirmed by 459
    - 23 -
    District courts for the Southern District of Texas routinely grant summary
    judgment dismissing TPPCA claims (and all other claims) after the carrier pays the
    appraisal award. 97 And so do district courts in the Eastern District,98 and the
    Western District.99
    Graber finds no support among Texas state courts either. Courts that have
    addressed these claims have also held that payment of an appraisal award means
    Fed. Appx. 366 (5th Cir. 2012) (emphasis added) (quoting In re 
    Slavonic, 308 S.W.3d at 563-64
    ).
    97
    Gabriel, 
    2013 U.S. Dist. LEXIS 186032
    , at *12, *20-21 (S.D. Tex. Nov. 1, 2013);
    Tabor, No. 7:14-cv-389, at pp. 15-16; Moore, 
    2014 U.S. Dist. LEXIS 15277
    , at *14-
    30; Hernandez, 
    2014 U.S. Dist. LEXIS 15276
    , at *14-30; Caso, 2014 U.S. Dist.
    LEXIS 15279, at *14-24; Cavazos v. State Farm Lloyds, No. 7:13-CV-00252, Minute
    Entry of 10/27/15 (S.D. Tex. Oct. 27, 2015); Corpus v. State Farm Lloyds, No. 7:14-
    CV-00383, Minute Entry of 10/27/15, (S.D. Tex. Oct. 27, 2015); Guerra v. State
    Farm Lloyds, No. 7:14-CV-00381, Minute Entry of 10/27/15, (S.D. Tex. Oct. 27,
    2015); Solis v. State Farm Lloyds, No. 7:13-cv-00149, Minute Entry of 10/27/15
    (S.D. Tex. Oct. 27, 2015); Villanueva v. State Farm Lloyds, No. 7:13-CV-00601,
    Minute Entry of 10/27/15, (S.D. Tex. Oct. 27, 2015); Rios v. State Farm Lloyds, No.
    7:13-CV-00187, Minute Entry of 8/17/15 (S.D. Tex. August 17, 2015); Scalise, 
    2013 U.S. Dist. LEXIS 179692
    , at *11 (S.D. Tex. Dec. 20, 2013); Stewart v. Geovera
    Specialty Ins. Co., No. H-14-3162 at p. 8 (S.D. Tex. October 21, 2015); Burks, 
    2015 U.S. Dist. LEXIS 88729
    , at *5, *12-16; Barry, 
    2015 U.S. Dist. LEXIS 40953
    , at *15;
    United Neurology, P.A. v. Hartford Lloyd's Ins. Co., 
    101 F. Supp. 3d 584
    (S.D. Tex.
    2015) affirmed by 624 Fed. Appx. 225 (5th Cir. 2015); Mag-Dolphus, 
    906 F. Supp. 2d
    at 652; Medistar Twelve Oaks Partners, Ltd. v. Am. Econ. Ins. Co., No. H-09-
    3828, 2011 US. Dist. LEXIS 82846, at *31, *23-24 n.8 (S.D. Tex. July 27, 2011);
    Waterhill, 
    2006 U.S. Dist. LEXIS 15302
    , at *10.
    98
    Studer v. State Farm Lloyds, No. 4:13-CV-413, 
    2016 U.S. Dist. LEXIS 99883
    (E.D.
    Tex. July 29, 2016); Quibodeaux v. Nautilus Ins. Co., No. 1:10-CV-739, 2015 U.S.
    Dist. LEXIS 39324, at *25-26 (E.D. Tex. Mar. 10, 2015) affirmed by 2016 U.S. App.
    LEXIS 12643 (5th Cir. Jul. 7, 2016).
    99
    Michels v. Safeco Ins. Co. of Indiana, No. A-12-CA-511-SS, Slip Op. at p. 9 (W.D.
    Tex. March 13, 2013) affirmed by 544 Fed. Appx. 535, 542-543 (5th Cir. 2013).
    - 24 -
    that TPPCA claims must be dismissed—as a matter of law. 100 As one legal article
    characterized it, Graber is an "outlier." 101 Graber was voluntarily dismissed by the
    Plaintiff before an appeal of the District Court's interlocutory order.
    B.     Graber relies on distinguishable authority that did not involve
    appraisal.
    Graber relied on Higginbotham v. State Farm Mutual Automobile Ins. Co.102
    to disregard a long line of cases finding that timely payment of an appraisal award
    precludes a prompt payment claim. But Higginbotham is distinguishable because
    it was not an appraisal case and the insurer in that case was found liable for breach
    of contract by a jury after it denied a claim. 103 The distinction is crucial. Not only
    was there no finding of State Farm's liability in Graber—there was actually a
    finding that State Farm was not liable to the Plaintiff for breach of contract when
    the Court granted State Farm's motion for summary judgment on the plaintiff's
    breach of contract claim. The Fifth Circuit recently explained in Tremago that
    100
    Anderson, 2016 Tex. App. LEXIS 6538, at *13; Bernstein v. Safeco Ins. Co. of Ill.,
    No. 05-13-01533-CV, 2015 Tex. App. LEXIS 6699, at *3 (Tex. App.—Dallas, June
    30, 2015, no pet.); In re Slavonic Mut. Fire Ins. Ass'n, 
    308 S.W.3d 556
    , 563-64 (Tex.
    App.—Houston [14th Dist.] 2010, no pet.); Amine v. Liberty Lloyds of Tex. Ins., No.
    01-06-00396-CV, 2007 Tex. App. LEXIS 6280, at *13-15 (Tex. App.—Houston [1st
    Dist.] 2007, no pet.); 
    Breshears, 155 S.W.3d at 343
    .
    101
    Brad E. Brewer & James W. Holbrook, II, Graber v. State Farm Is a Texas Prompt
    Payment         Outlier,        Law         360,         August       10,       2015,
    http://www.law360.com/articles/686001/graber-v-state-farm-is-a-texas-prompt-
    payment-outlier (last visited July 28, 2016).
    102
    
    103 F.3d 456
    (5th Cir. 1997).
    103
    
    Id. at 461.
    - 25 -
    when there is no prospect for a finding of liability for breach of contract,
    Higginbotham is inapposite:
    Here, there has been no such liability determination. Similarly, this
    court has made clear that an insurer was liable under the Prompt
    Payment Act "when it was found liable for breach of contract."
    Higginbotham v. State Farm Mutual Automobile Ins. Co., 
    103 F.3d 456
    , 461 (5th Cir. 1997). Since Euler has never been found liable for
    breach of contract, nor will it ever face such a liability determination
    because the breach of contract claim was settled, these cases are
    inapposite. Summary judgment on Continental's Prompt Payment Act
    claim was appropriate. 104
    Tremago is consistent with Higginbotham in that a good faith defense will
    not avoid statutory penalties "as long as the insurer is finally judged liable."105
    Tremago is also consistent with earlier Fifth Circuit law recognizing (under a
    predecessor statute) that "the penalty is due if the Insurer is ultimately held liable
    on the policy." 106 Because there was no final judgment of liability under the
    insurance contract against State Farm, and never could be since the contract claim
    104
    Tremago, L.P. v. Euler-Hermes Am. Credit Indem. Co., 602 Fed. Appx. 981, 983-84
    (5th Cir. 2015) (emphasis added).
    105
    
    Higginbotham, 103 F.3d at 461
    (citing Key Life Ins. Co. of S.C. v. Davis, 
    509 S.W.2d 403
    , 405 (Tex. Civ. App.—Beaumont 1974, no writ)) (emphasis added); see also
    Cater v. United Servs. Auto. Ass'n, 
    27 S.W.3d 81
    , 84 (Tex. App.—San Antonio 2000,
    pet. denied) ("The Fifth Circuit [in Higginbotham] recognized that courts that
    interpreted article 3.62 [the predecessor of art. 21.55] consistently found that an
    insurance company's good faith defense did not relieve the insured from liability for
    damages for late payment, as long as the insurer is finally found liable for the
    claim.") (emphasis added).
    106
    Lumbermens Mut. Cas. Co. v. Klotz, 
    251 F.2d 499
    , 509 (5th Cir. 1958) (emphasis
    added).
    - 26 -
    was dismissed by summary judgment, the Court in Graber should have dismissed
    the plaintiffs' TPPCA claim.
    C.    The facts here are distinguishable from Graber.
    The Graber court explained it was not holding "that payment of an appraisal
    award automatically establishes an insurer's liability for [a TPPCA] claim." 107 The
    court's ruling hinged (incorrectly) on language in State Farm's letter issuing
    payment of the appraisal award that said "the cost to repair or replace those items
    of damage that State Farm has determined are covered by the Homeowners
    policy." 108 Contrary to Higginbotham and Tremago, the district court incorrectly
    concluded this language was evidence of State Farm's "liability" for purposes of
    the TPPCA. Thus, the key fact in Graber that lead to the Court's erroneous
    decision is not present in this case. State Farm's letter issuing payment of the
    appraisal award does not contain any language "accepting coverage" based on the
    award.109 State Farm paid the appraisal award to resolve the claim—which is the
    purpose of appraisal.110
    107
    Graber, 
    2015 U.S. Dist. LEXIS 77361
    , at *25, n.3.
    108
    
    Id. 109 CR
    183 (Letter Tendering Payment of Appraisal Award).
    110
    Scalise, 
    2013 U.S. Dist. LEXIS 179692
    , at *11.
    - 27 -
    D.     Garcia has not raised a fact issue.
    Garcia argues that the evidence demonstrates State Farm is liable under the
    TPPCA. 111 That is not the case. State Farm timely investigated Garcia's claim.
    The claim was reported January 22, 2015, and State Farm contacted Garcia on the
    same day. 112 The parties scheduled an inspection of Garcia's dwelling on February
    26, 2015.113 State Farm sent Garcia its estimate on March 2, 2015, within two
    business days of inspecting Garcia's property. 114 There was no violation of any of
    the provisions of Chapter 542.
    VI.     Without a valid breach of contract claim, all of Garcia's extra-
    contractual claims fail.
    The general rule in Texas is that an insured cannot prove a bad faith claim
    absent a breach of contract.115 In Liberty National Fire Insurance. Co. v. Akin,116
    the Texas Supreme Court cited with approval its earlier decision in Republic
    Insurance Co. v. Stoker and held that an insured cannot prevail on a bad faith claim
    without first showing a breach of contract.117 In Stoker, the Supreme Court noted
    the only recognized exceptions to this rule are if the insurer "commit[s] some act,
    111
    Appellant's Brief at p. 29.
    112
    CR 139.
    113
    CR 139; 142-43.
    114
    CR 141.
    115
    Republic Ins. Co. v. Stoker, 
    903 S.W.2d 338
    , 341 (Tex. 1995).
    116
    
    927 S.W.2d 627
    (Tex. 1996).
    117
    
    Id. at 629.
    - 28 -
    so extreme, that would cause injury independent of the policy claim" or fails "to
    timely investigate the insured's claim." 118 The Fifth Circuit—in Blum's—adopted
    Akin and Stoker in an appraisal case. 119
    Garcia argues that the Stoker independent injury exception does not apply in
    this case because the claim was covered. 120 This argument has been expressly
    rejected in an appraisal case:
    Plaintiffs argue that the Akin rule generally prohibiting bad faith
    claims without a breach of contract should be limited to cases where
    in fact there is no insurance coverage. Such a distinction has not been
    found in the Texas cases and appears entirely unwarranted, especially
    in light of the Fifth Circuit's persuasive opinion applying the Akin rule
    in Blum's Furniture. The court there held that the insured raised no
    genuine issue of material fact on its bad faith claims when the insurer,
    as here, did not deny coverage and paid the appraisal amount, which
    the insured accepted. 121
    Garcia relies on United National Insurance Co. v. AMJ Investments, LLC to
    argue that the Stoker independent injury exception does not apply to her.122 But
    AMJ was not an appraisal case. In that case, the insured succeeded on its breach of
    contract claim at trial. Here, Garcia's contract claim is barred by State Farm's
    timely payment of the appraisal award. AMJ is inapposite. It does not hold that
    118
    
    Stoker, 903 S.W.2d at 341
    .
    119
    Blum's, 459 Fed. Appx. at 368.
    120
    Appellant's Brief at p. 31.
    121
    Burks, 
    2015 U.S. Dist. LEXIS 88729
    , at *12 (citations omitted).
    122
    
    447 S.W.3d 1
    , 11–12 (Tex. App.—Houston [14th Dist.] 2014, pet dism'd).
    - 29 -
    when a breach of contract claim fails, the insured may recover for bad faith without
    proving independent injury.
    Garcia also cites USAA Texas Lloyds Co. v. Menchaca, but that case did not
    involve the payment of an appraisal award. 123 And it squarely conflicts with the
    Texas Supreme Court's holding in Provident Am. Ins. Co. v. Castaneda that a
    failure to properly investigate cannot support an award of policy benefits. 124 The
    persuasive value of Menchaca is also highly questionable because it is currently
    pending before the Texas Supreme Court, where briefing on the merits has been
    requested.
    Garcia points out that an independent injury exception case had been
    certified to the Texas Supreme Court. 125 But the Deepwater Horizon case has been
    dismissed by agreement.126 Even if settlement had not rendered Garcia's reliance
    on the case moot, that case is distinguishable because it is not an appraisal case and
    the court found the insurance company breached the contract by denying policy
    benefits.
    123
    No. 13-13-00046-CV, 2014 Tex. App. LEXIS 8250 (Tex. App.—Corpus Christi July
    31, 2014, pet. filed) (mem. op.).
    124
    
    988 S.W.2d 189
    , 198 (Tex. 1998).
    125
    Appellant's Brief at p. 52.
    126
    Cameron Int'l Corp. v. Liberty Ins. Underwriters, Inc. (In re Deepwater Horizon),
    
    807 F.3d 689
    (5th Cir. 2015) (dismissed by agreement).
    - 30 -
    Garcia mischaracterizes an interlocutory order in Cavazos v. State Farm
    Lloyds 127 as rejecting the independent-injury rule. 128 Judge Alvarez did not decide
    the issue in Cavazos; she only noted that the Deepwater Horizon case had been
    certified.129 But she also noted that the breach of contract claim survived, which
    impacted the decision. 130 In fact, Judge Alvarez has followed Blum's and the
    application of the Stoker independent injury exception in other appraisal cases,
    dismissing extra-contractual claims by summary judgment:
    In light of the Court's determination regarding the breach of contract
    claim, Plaintiffs' common law or statutory bad faith claims survive the
    summary analysis only if Plaintiffs raise a genuine issue of material
    fact as to either of two exceptions recognized in Republic Ins. Co. v.
    Stoker: (1) the insurer's failure to timely investigate the insured's
    claim; or (2) the insurer's commission of "some act, so extreme, that
    would cause injury independent of the policy claim." The end result,
    recognized by the Fifth Circuit in Blum's Furniture Co., Inc. v.
    Certain Underwriters at Lloyds London, is that a plaintiff "cannot
    maintain an action for bad faith where the breach of contract claim
    fails, and neither exception applies." 131
    And even after Cavazos, Judge Alvarez continues to dismiss extra-
    contractual claims based on Blum's and Stoker, and rejects parties' attempts to rely
    127
    No. 7:14-CV-395, 
    2015 U.S. Dist. LEXIS 163287
    (S.D. Tex. Dec. 4, 2015).
    128
    Appellant's Brief at p. 32.
    129
    Cavazos, 
    2015 U.S. Dist. LEXIS 163287
    , at *15.
    130
    
    Id. at *14-15.
    131
    Caso, 
    2014 U.S. Dist. LEXIS 15279
    , at *25-26; see also Gabriel, 2013 U.S. Dist.
    LEXIS 186032, at *15-22.
    - 31 -
    on Cavazos, as Garcia does. 132 Other courts in the Southern District have also
    rejected Garcia's argument that she does not have to show independent injury. 133
    The Houston Court of Appeals in Anderson also applied Stoker in a recent
    appraisal case.134
    Garcia's statutory claims against State Farm and adjuster Garza under
    Chapter 541 of the Texas Insurance Code and under the DTPA fail for the same
    reasons.     Numerous courts have recognized that these statutory claims are
    reviewed under the same standard as a common law bad faith claim, and require
    the same predicate for recovery. 135 "When an insured joins claims under the Texas
    Insurance Code and the DTPA with a bad faith claim, all asserting a wrongful
    denial of policy benefits, if there is no merit to the bad faith claim, there can be no
    132
    Dizdar v. State Farm Lloyds, No. 7:14-CV-402, 
    2016 U.S. Dist. LEXIS 13355
    , at
    *17 n.71 (S.D. Tex. Feb. 4, 2016); Dizdar v. State Farm Lloyds, No. 7:14-CV-664,
    
    2016 U.S. Dist. LEXIS 20871
    , at *18-19 n.75 (S.D. Tex. Feb. 22, 2016); Dizdar v.
    State Farm Lloyds, No. 7:14-CV-514, 
    2016 U.S. Dist. LEXIS 49839
    , at *16-17 n.67
    (S.D. Tex. Apr. 13, 2016).
    133
    Burks, 
    2015 U.S. Dist. LEXIS 88729
    , at *11-15; Scalise, 
    2013 U.S. Dist. LEXIS 179692
    , at *20-23; Russell, 
    2014 U.S. Dist. LEXIS 143882
    , at *18-22; Mag-
    Dolphus, Inc., 
    906 F. Supp. 2d
    at 649-50; Barry, 
    2015 U.S. Dist. LEXIS 40953
    , at
    *11-14.
    134
    Anderson, 2016 Tex. App. LEXIS 6538, at *15.
    135
    See Anderson, 2016 Tex. App. LEXIS 6538, at *18; Tex. Mut. Ins. Co. v. Sara Care
    Child Care Ctr., Inc., 
    324 S.W.3d 305
    , 317 (Tex. App.—El Paso 2010, pet. denied);
    Spicewood Summit Office Condominiums Ass'n, Inc. v. Amer. First Lloyd's Ins. Co.,
    
    287 S.W.3d 461
    , 468 (Tex. App.—Austin 2009, pet. denied); Douglas v. State Farm
    Lloyds, 
    37 F. Supp. 2d 532
    , 544 (S.D. Tex. 1999); Higginbotham v. State Farm Mut.
    Auto. Ins. Co., 
    103 F.3d 456
    , 460 (5th Cir. 1997) (holding Texas courts have ruled
    DTPA and Insurance Code claims require same predicate for recovery as bad faith
    causes of action).
    - 32 -
    liability on either statutory claim." 136 Here, there is no merit to Garcia's bad faith
    claim.
    Garcia conflates the independent injury issue in her discussion of the claims
    against adjuster Garza, arguing that because adjuster Garza had no contract with
    Garcia, those claims survive. They do not. They were, as State Farm alleged,
    derivative of, and based on the same facts asserted against State Farm. 137 Garcia
    alleged no specific conduct by adjuster Garza that caused an independent injury. 138
    Allegations, like Garcia's, that an adjuster assigned to a claim did not thoroughly
    investigate the claim and conducted an outcome-oriented investigation do not
    establish a valid cause of action against the adjuster individually. 139 Absent an
    independent injury, Garcia has no bad faith or statutory claims against State Farm
    or adjuster Garza. 140
    136
    Anderson, 2016 Tex. App. LEXIS 6538, at *18 (quoting O'Quinn v. Gen. Star Indem.
    Co., No. 1:13-CV-471, 
    2014 U.S. Dist. LEXIS 107484
    (E.D. Tex. Aug. 5, 2014)).
    137
    CR 70; see also CR 234-39 (First Amended Petition).
    138
    CR 234-39 (First Amended Petition).
    139
    Walters v. Metro Lloyds Ins. Co., 4:16-CV-307, 
    2016 U.S. Dist. LEXIS 91244
    , at *7
    (E.D. Tex. July 14, 2016).
    140
    Confusingly, Garcia cites Waite Hill Services, Inc. v. World Class Metal Works, Inc.,
    959 S.w.2d 182 (Tex. 1998) and Vail v. Texas Farm Bureau Mutual Ins. Co., 
    754 S.W.2d 129
    (Tex. 1988), in support of her argument that she can recover policy
    benefits from adjuster Garza individually. Appellant's Brief at p. 34. But both of
    those cases involved claims only against an insurance company; neither case
    involved an individual adjuster defendant. The cases do not support Garcia's
    argument.
    - 33 -
    There is no independent injury, and Garcia does not argue that there is.
    "Here, [Garcia] has made only those fairly routine allegations of a substandard
    (albeit timely) investigation and initial undervaluation of [her] covered claim, the
    entirety of which was timely paid upon issuance of the appraisal award."141
    Garcia's extra-contractual claims are foreclosed by the timely payment of the
    appraisal award.
    CONCLUSION AND PRAYER
    Texas law is settled that payment of an appraisal award resolves an insured's
    claims. Here, as in many other cases in state and federal courts in Texas, the trial
    court properly disposed of the resolved claims by summary judgment. As this
    Court recognized in Providence Lloyds Ins. Co. v. Crystal City I.S.D., it would
    have been error to allow the claims to proceed to trial after the appraisal award was
    paid.142 Garcia cannot circumvent settled Texas law by her technical, procedural
    arguments to delay summary judgment. The denial of her continuance request was
    not appealed. And Texas law did not require State Farm to reset the summary
    judgment hearing in order to modify or supplement its motion after Garcia
    amended her petition to add the new defense that the award should be set aside.
    The summary judgment grounds before the Court were already broad enough to
    141
    Scalise, 
    2013 U.S. Dist. LEXIS 179692
    , at *22-23.
    142
    Providence Lloyds Ins. 
    Co., 877 S.W.2d at 875
    .
    - 34 -
    include, and in fact were based upon, the validity of the paid appraisal award.
    There was no error. The trial court's judgment should be affirmed.
    State Farm and adjuster Garza pray that the Court affirm the trial court's
    take-nothing judgment against Garcia and that State Farm and adjuster Garza be
    awarded all other relief to which they are entitled.
    Respectfully submitted,
    WINSTEAD PC
    401 Congress Avenue, Suite 2100
    Austin, Texas 78701
    512-370-2854 telephone
    512-370-2850 telecopier
    By:      /s/ Elliot Clark
    Linda J. Burgess    SBN 03381300
    Elliot Clark        SBN 24012428
    Dan K. Worthington       SBN 00785282
    Sofia A. Ramon           SBN 00784811
    Elizabeth Cantu          SBN 24013455
    ATLAS, HALL & RODRIGUEZ, LLP
    P. O. Drawer 3725
    818 Pecan (78501)
    McAllen, Texas 78502
    (956) 682-5501 telephone
    (956) 686-6109 telecopier
    ATTORNEYS FOR APPELLEES
    - 35 -
    CERTIFICATE OF COMPLIANCE
    I certify that the word count for this filing, excluding portions of the brief
    that need not be counted under Rule 9.4(i)(1) and including the Introduction at is
    9,757 according to the Microsoft Word 2010 word count feature, within the 15,000
    word limit set for merits briefing by Rule 9.4(i)(2)(B).
    /s/ Elliot Clark
    Elliot Clark
    CERTIFICATE OF SERVICE
    I hereby certify that on the 12th day of August, 2016, I electronically filed
    the foregoing with the Clerk of the Court and same was sent to the following
    counsel of record.
    Bernie Kray
    bkray@anglawfirm.com
    Troy A. Glander
    M. Alex Nava
    ALLAN, NAVA, GLANDER & HOLLAND, PLLC
    serveone@anglawfirm.com
    825 W. Bitters Road, Suite 102
    San Antonio, Texas 78216
    (210) 305-4220 – Phone
    (210) 305-4219 – Fax
    /s/ Elliot Clark
    Elliot Clark
    - 36 -
    4827-2867-6404v.3 25249-698
    

Document Info

Docket Number: 04-16-00209-CV

Filed Date: 8/12/2016

Precedential Status: Precedential

Modified Date: 4/17/2021

Authorities (29)

Judwin Properties, Inc. v. Griggs & Harrison , 911 S.W.2d 498 ( 1995 )

Home Ins. Co. v. Walter , 1921 Tex. App. LEXIS 224 ( 1921 )

Cater v. United Services Automobile Ass'n , 2000 Tex. App. LEXIS 4273 ( 2000 )

Douglas v. State Farm Lloyds , 37 F. Supp. 2d 532 ( 1999 )

Lumbermens Mutual Casualty Company v. Dr. Harry Leslie Klotz , 251 F.2d 499 ( 1958 )

Vail v. Texas Farm Bureau Mutual Insurance Co. , 31 Tex. Sup. Ct. J. 392 ( 1988 )

Lundstrom v. United Services Automobile Ass'n-CIC , 2006 Tex. App. LEXIS 605 ( 2006 )

Cissne v. Robertson , 1989 Tex. App. LEXIS 3214 ( 1989 )

Key Life Insurance Co. of South Carolina v. Davis , 1974 Tex. App. LEXIS 2184 ( 1974 )

Smith v. Heard , 980 S.W.2d 693 ( 1998 )

Providence Lloyds Insurance Co. v. Crystal City Independent ... , 1994 Tex. App. LEXIS 1599 ( 1994 )

Toonen v. United Services Automobile Ass'n , 1996 Tex. App. LEXIS 5275 ( 1996 )

Continental Ins. Co. of New York v. Guerson , 1936 Tex. App. LEXIS 360 ( 1936 )

Liberty National Fire Insurance Co. v. Akin , 927 S.W.2d 627 ( 1996 )

Farah v. Mafrige & Kormanik, P.C. , 927 S.W.2d 663 ( 1996 )

Texas Department of Public Safety v. Mendoza , 1997 Tex. App. LEXIS 3999 ( 1997 )

Lampasas v. Spring Center, Inc. , 1999 Tex. App. LEXIS 2044 ( 1999 )

Cook Composites, Inc. v. Westlake Styrene Corp. , 2000 Tex. App. LEXIS 426 ( 2000 )

Gardner v. State Farm Lloyds , 76 S.W.3d 140 ( 2002 )

MacKie v. McKenzie , 900 S.W.2d 445 ( 1995 )

View All Authorities »